Question

In: Accounting

Henry Corporation sold a Capital Asset in 2019 that it had held for two (2) years...

Henry Corporation sold a Capital Asset in 2019 that it had held for two (2) years at a loss of $30,000. In 2019, Henry Corporation had Taxable Income From Operations of $80,000 (Ordinary Income) and also had a Short-Term Capital Gain of $16,000. The “total” Capital Loss that Henry Corporation may deduct (offset) for the tax year of 2019 is:

  1. $30,000
  2. $3,000
  3. $16,000
  4. $0

Solutions

Expert Solution

Hnery has sold capital asset after holding it for 2 years which makes it a long term capital asset therefore $30000 is long term capital loss.

Long term capital gain or losses can only be offset against any long term capital asset only. Therefore, total capital loss of $3000 can be setoff from taxable income other than short term capital gainas per the law.

$27000 will be carried forward in next years.

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

On April 4, 2017, Mexco sold stock it held as an investment. It had a $300,000...
On April 4, 2017, Mexco sold stock it held as an investment. It had a $300,000 short-term capital loss on the sale. It also sold a building, equipment, and the land under the building on July 1, 2017. Information about each asset is presented below. Mexco used MACRS depreciation on the equipment and straight-line depreciation on the building. Additionally, Mexco had a $75,000 Code Sec. 1231 loss last year (and it has no Code Sec. 1231 gains or losses in...
Bill had the following gains and losses on asset sales: $500 gain on stock held 11...
Bill had the following gains and losses on asset sales: $500 gain on stock held 11 months; a $2,300 gain on land held two years; $1,900 loss on gold coins held two years; $1,200 gain on antique toys held three years; and a $1,300 loss on investment land held six months. Determine Bill’s (A) net capital gain or loss, (B) the capital gains rate that applies to each asset sale, (C) the capital gain rate(s) that would apply to the...
A corporation has decided to replace an existing asset with a newer model. Two years ago,...
A corporation has decided to replace an existing asset with a newer model. Two years ago, the existing asset originally cost $30,000 and was being depreciated under MACRS using a five-year recovery period. The existing asset can be sold for $32,000. The new asset will cost $75,000 and will also be depreciated under MACRS using a five-year recovery period. If the assumed tax rate is 40 percent on ordinary income and capital gains, the initial investment is ______. Select one:...
A corporation has decided to replace an existing asset with a newer model. Two years ago,...
A corporation has decided to replace an existing asset with a newer model. Two years ago, the existing asset originally cost $30,000 and was being depreciated under MACRS using a five-year recovery period. The existing asset can be sold for $45,400. The new asset will cost $75,000 and will also be depreciated under MACRS using a five-year recovery period. If the assumed tax rate is 40 percent on ordinary income and capital gains, the initial investment is ______. Select one:...
On January 1, 2019, Nonsuch Corporation sold specialized equipment originally costing $9,500 (Nonsuch had paid 9,500...
On January 1, 2019, Nonsuch Corporation sold specialized equipment originally costing $9,500 (Nonsuch had paid 9,500 to buy it as inventory). The market value of the equipment was not readily determinable. Nonsuch sold the equipment to Neverland, Inc. who is going to use it in their operations for 5 years at which time it will have no salvage value. Nonsuch received a $4,000 down payment from Neverland and will receive five payments of 4,000 made annually (without a stated interest...
Michael and Mary Mason sold for $520,000.00 in March of 2019 their residence that they had...
Michael and Mary Mason sold for $520,000.00 in March of 2019 their residence that they had purchased in 2014 for $75,000.00. They had made capital improvements during their 10-year ownership totaling $25,000.00. They moved into a smaller house that cost $220,000.00. A). What is their recognized gain should they elect to use Section 121? _______ _____ B). What is their recognized gain should they elect to use Section 121 if they sold the house for $720,000.00? C). Assume instead that...
Pina Corporation had the following activities in 2020. 1. Sold land for $201,000. 2. Purchased an...
Pina Corporation had the following activities in 2020. 1. Sold land for $201,000. 2. Purchased an FV-NI investment in common shares for $14,400. 3. Purchased inventory for $852,000 with cash. 4. Received $72,300 cash from bank borrowings. 5. Received interest for $12,900. 6. Purchased equipment for $489,000 in exchange for common shares. 7. Issued common shares for $357,000 cash. 8. Recorded an unrealized gain of $3,250 on investments accounted for using the fair value through net income (FV-NI) model. 9....
Tracy started his sole proprietorship business two years ago and has never sold a §1231 asset....
Tracy started his sole proprietorship business two years ago and has never sold a §1231 asset. Tracy owned each of the assets for the entire 2 years he has been in business. In the current year, he sold the following business assets: Asset Original Cost Accumulated Depreciation Gain/Loss Desks $8,000 $2,000 ($2,000) Truck 12,000 6,000 (6,000) Equipment 18,000 12,000 13,500 Building 150,000 10,000 25,000Assuming Tracy’s marginal ordinary income tax rate is 30 percent, what is the character of Tracy’s gains...
Estelle Corporation owns assets worth $ 6.00 billion. For each of the next two years, asset...
Estelle Corporation owns assets worth $ 6.00 billion. For each of the next two years, asset values will either go up by $42% or go down by $33%. The risk-free interest rate is 3.0%. Estelle has a debt of $ 7.00 billion maturing in 2 years. Compute the price of 1 share of Estelle, given it has 200 million shares outstanding.
For 2019, Lucy, a surviving spouse, had taxable income of $120,000, excluding capital transactions. In 2019,...
For 2019, Lucy, a surviving spouse, had taxable income of $120,000, excluding capital transactions. In 2019, Lucy’s capital transactions were as follows: Short-term Long-term 28 percent basket Long-term 0/15/20 percent basket Gains 10,000 20,000 2,000 Losses (13,000) (24,000) (0) In addition, Lucy had a ($2,200) short-term capital loss carryover and a ($1,000) long-term capital loss carryover, both from 2018. Compute Lucy’s capital loss deduction in 2019 and the amount and character of any capital loss carryover to 2020.
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT